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Efficiency-Wage Unemployment and Intersectoral Wage Differentials in a Heckscher-Ohlin Model

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  • Max Albert
  • Jürgen Meckle

Abstract

The paper analyzes a Heckscher-Ohlin (HO) model with efficiency-wage unemployment (henceforth HOe model). We show that all HO results have close HOe analogues. Additionally, conditions are derived under which immigrants might not only find employment for themselves but also raise employment for natives. Moreover, we analyze the ranking of countries with respect to their rate of unemployment, showing that this ranking may be reversed as countries move from autarky to trade. All results are clearly linked to factor intensities and the pattern of intersectoral wage differentials. Copyright Verein fü Socialpolitik and Blackwell Publishers Ltd 2001.

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Bibliographic Info

Article provided by Verein für Socialpolitik in its journal German Economic Review.

Volume (Year): 2 (2001)
Issue (Month): 3 (08)
Pages: 287-301

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Handle: RePEc:bla:germec:v:2:y:2001:i:3:p:287-301

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References

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  1. James Harrigan, 1996. "Technology, factor supplies, and international specialization: estimating the neoclassical model," Staff Reports 15, Federal Reserve Bank of New York.
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  7. Lawrence H. Summers, 1988. "Relative Wages, Efficiency Wages, and Keynesian Unemployment," NBER Working Papers 2590, National Bureau of Economic Research, Inc.
  8. Solow, Robert M., 1979. "Another possible source of wage stickiness," Journal of Macroeconomics, Elsevier, vol. 1(1), pages 79-82.
  9. Agell, Jonas & Lundborg, Per, 1992. "Fair wages, involuntary unemployment and tax policies in the simple general equilibrium model," Journal of Public Economics, Elsevier, vol. 47(3), pages 299-320, April.
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  13. Davidson, Carl & Martin, Lawrence & Matusz, Steven, 1999. "Trade and search generated unemployment," Journal of International Economics, Elsevier, vol. 48(2), pages 271-299, August.
  14. Neary, J Peter, 1985. "International Factor Mobility, Minimum Wage Rates, and Factor-Price Equalization: A Synthesis," The Quarterly Journal of Economics, MIT Press, vol. 100(3), pages 551-70, August.
  15. Steven J. Matusz, 1994. "International Trade Policy in a Model of Unemployment and Wage Differentials," Canadian Journal of Economics, Canadian Economics Association, vol. 27(4), pages 939-49, November.
  16. Hoon, Hian Teck, 1991. "Comparative advantage and the equilibrium rate of unemployment," Economics Letters, Elsevier, vol. 37(3), pages 299-304, November.
  17. Mussa, Michael, 1993. "Making the Practical Case for Freer Trade," American Economic Review, American Economic Association, vol. 83(2), pages 372-76, May.
  18. Krugman, Paul R, 1993. "What Do Undergrads Need to Know about Trade?," American Economic Review, American Economic Association, vol. 83(2), pages 23-26, May.
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Cited by:
  1. Vesna Stavrevska, 2011. "The efficiency wages perspective to wage rigidity in the open economy: a survey," International Journal of Manpower, Emerald Group Publishing, vol. 32(3), pages 273-299, July.
  2. Nathalie Chusseau & Joël Hellier, 2012. "Globalization and Inequality: Where do we stand?," Working Papers 279, ECINEQ, Society for the Study of Economic Inequality.
  3. Joël Hellier, 2012. "The North-South HOS Model, inequality and globalization," Working Papers 244, ECINEQ, Society for the Study of Economic Inequality.
  4. Porto, Guido, 2008. "Agro-manufactured export prices, wages and unemployment," Policy Research Working Paper Series 4489, The World Bank.
  5. Jürgen Meckl, 2006. "Does European Unemployment Prop Up American Wages? National Labor Markets and Global Trade: Comment," American Economic Review, American Economic Association, vol. 96(5), pages 1924-1930, December.

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